Item 13 - Award an Agreement for Managment of Ad Services at Bus Stops

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Agreement for Bus Stop Advertising February 17, 2026 Page 5 Unlike the prior agreement, the proposed agreement does not allow maintenance costs to be deducted from advertising revenues, nor does it reduce payments to the City if COA's revenue projections are not met, provided the minimum inventory of 160 advertising units and 320 advertising faces is maintained. The City currently meets the minimum inventory and has more bus shelters planned for installation this year, further strengthening our capacity to maintain minimum advertising faces. At minimum, the City will receive $160,000 annually with the potential for higher revenues if advertisement sales exceed the guaranteed amount (MAG). The proposed agreement structure establishes clear financial incentives for COA to actively pursue advertising sales and maximize program revenue. Under the agreement, COA is responsible for all advertising sales activities and is compensated through advertising revenue, while the City receives either a MAG or a percentage of gross advertising revenue, whichever is greater. Because COA's financial return increases only when advertising occupancy and rates increase, the agreement inherently incentivizes the contractor to actively market available advertising space, pursue higher -value advertising contracts, and maintain high occupancy rates. The agreement also requires regular reporting of advertising activity, occupancy rates, and revenue performance, allowing Staff to monitor program performance and address any issues promptly. The contractor's continued success under the agreement depends on maintaining strong relationships with advertisers, demonstrating reliable service delivery, and consistently filling advertising inventory with paying clients. By separating maintenance responsibilities from advertising operations, the revised structure allows the contractor to focus exclusively on advertising performance. This focused responsibility, combined with guaranteed payments to the City and performance transparency, creates ongoing motivation for the contractor to innovate marketing approaches, pursue premium advertisers, and maximize revenue generation throughout the term of the agreement. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT Revenues from this agreement will be budgeted in the General Fund -Public Works Revenues, Bus Shelter Fees revenue account (No. 01117002-51004). Future revenues will be budgeted in the General Fund -Public Works Revenues, Bus Shelter Fees revenue account (No. 01117002-51004) and appropriated in the General Fund -Bus Shelter Program -Service Enhancement expenditure accounting unit (No. 01117621).